How to Choose an ETF
Exchange-traded funds reduce risk by diversifying portfolios
Retail investors had their choice among 3,145 exchange-traded funds (ETFs) as of the beginning of this year, according to Morningstar. But how do you pick the right ones?
Here are some key questions to ask and three metrics to consider. Keep in mind that nobody has to choose just one
ETF and that prudent investors often add diversification on top of diversification.
A great question to start with is this: “Where do I see growth potential around the world?” Investors with money already invested in U.S. stocks may look overseas for diversification. Here are some possible global funds:
What if an investor decides to stick with domestic funds? Well, after chanting, ”USA…USA,” it’s good to assess both broad market ETFs and sector- or industry-specific funds.
Also consider whether to invest just in stocks. Certain ETFs provide access to markets like bonds and precious metals.
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